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New Jersey Dep't of Environmental Protection v. Singh


December 14, 2007


On appeal from the Commissioner, Department of Environmental Protection, Docket No. EWR-2913-05.

Per curiam.


Submitted November 26, 2007

Before Judges Parrillo and Sabatino.

In this environmental enforcement action, appellant Cahattarpal Singh, d/b/a KXI Runnemede XTRA (Singh), appeals from a final decision of the New Jersey Department of Environmental Protection (DEP) assessing Singh a civil administrative penalty of $15,000 for violating provisions of the Underground Storage of Hazardous Substances Act (USHSA), N.J.S.A. 58:10A-21 to -37, and regulations promulgated thereunder, N.J.A.C. 7:14B-4.1(a)(3)(ii), by maintaining inoperable UST (underground storage tank) overfill devices. Appellant contends that its violation is "minor" and therefore falls within the Grace Period Law, N.J.S.A. 13:1D-125 to -133, but that even if not so exempted, the penalty should be substantially reduced in light of mitigating factors ignored by DEP. We disagree with both contentions, and affirm.

The facts are undisputed. Appellant operates a gas station in Runnemede, which contains two 4,000-gallon and one 6,000-gallon USTs. On December 16, 2004, a DEP inspection revealed that two tank gauge sticks broken at both ends had been inserted into the fill ports of two of the tanks, preventing overfill devices from functioning properly. The overfill devices are intended to avert filling to 100% of capacity to avoid spillage, and the two broken gauge sticks discovered in the fill ports in this case prevented the flapper valves from closing when the tanks were filled to 95% capacity.*fn1

Appellant insists the fuel deliverer installed these sticks without his knowledge and that he immediately removed them upon DEP's discovery. According to DEP, the disabling of overflow prevention valves is a common practice whereby the transporter benefits from having to make fewer delivery trips, and the station operator benefits from a full fuel tank and a quantity discount.

In any event, as a further result of the DEP inspection, "contaminated soil and a suspected release had been observed in the tank field[;] . . . gauging sticks had been found in drop tubes T1 and T3; . . . the overfill device had been disabled; and . . . a contaminated soil pile had been found in the rear of the station." Consequently, DEP assessed a civil penalty of $15,000 against appellant, representing the midpoint of both the "seriousness" and "conduct" ranges of the applicable penalty matrix, found at N.J.A.C. 7:14-8.5(f).

Appellant contested the assessment and consequently the matter was transferred to the Office of Administrative Law (OAL). Following a plenary hearing, the Administrative Law Judge (ALJ) determined that appellant violated N.J.A.C. 7:14B-4.1(a)(3)(ii), and the violation was not "minor" within the Grace Period Law, N.J.S.A. 13:1D-129(b)(1)-(6). Recognizing that appellant "assert[ed] without contradiction that the fuel truck driver disarmed the safety devices," the ALJ noted that USHSA is a strict liability statute*fn2 that was enacted to prevent the very situation as had occurred here:

"filling tanks to maximum capacity saves time and money for the distributor and [the gas station] operator," and thus the law was meant to encourage operators such as appellant "to be observant when accepting deliveries."

While finding the violation not "minor," the ALJ disagreed with the quantum of the DEP's penalty assessment. In this regard, the ALJ noted that this was a first offense, that [appellant] had no prior knowledge of the transporter['s] intentions, and that there ha[d] been no recurrence in the last year and one half. [Appellant] therefore satisfies a number of mitigating considerations contemplated by the regulation[,] and found that although the penalty for this violation was at the midpoint for violations of moderate seriousness and conduct, the midpoint may be high. Most of the regulatory criteria weighing mitigation and aggravation tend to favor [the DEP].

Deterrence seems to be the major factor in support of the [DEP's] position. Thus, some movement down from the midpoint seems appropriate.

The ALJ reduced the penalty to $12,000.

Following exceptions filed by the parties, the DEP's Commissioner adopted the ALJ's Initial Decision with regard to liability and the inapplicability of the Grace Period Law, but rejected the reduction in penalty because [t]he Initial Decision . . . fails to . . . support . . . a reduction of the penalty assessment in light of the . . . . mitigating and aggravating factors . . . set forth [in] N.J.A.C. 7:14-8.5(i). Although the Initial Decision asserts that a review of these factors weighs in favor of [appellant], that conclusion is not fully supported by the record. Of the seven specific factors listed in N.J.A.C. 7:14-8.5(i), only one weighs in favor of lowering the penalty amount. . . . It was [appellant's] first offense . . . . Others seem to weigh against [appellant]. In particular, . . . the number, frequency and severity of the violation. Here, two of the three USTs had sticks placed in the overfill gauges, and the violations were continuous and ongoing. Further, although [appellant] did remove the broken sticks . . . . [he] did not fulfill all of the remedial requirements ordered by DEP, including the removal and testing of contaminated soil. On these facts, removal of the sticks alone is insufficient for N.J.A.C. 7:14-8.5(i)(3) or (5) to serve as a mitigating factor. Finally, the Initial Decision notes that the deterrent effect of the penalty requires some movement down from the midpoint.

N.J.A.C. 7:14-8.5(i)(4). The Initial Decision does not, however, provide any explanation or factual support for this statement.

The DEP Commissioner reinstated the $15,000 penalty.

On appeal, appellant reiterates his contention that the violations are "minor" and therefore excusable under the Grace Period Law, and, alternatively, the penalty was excessive. We disagree.

As a threshold matter, we note that administrative agency actions are presumed valid and reasonable, and "[t]he burden is on the [challenger] to overcome these presumptions." Bergen Pines County Hosp. v. N.J. Dep't of Human Servs., 96 N.J. 456, 477 (1984). Our role in reviewing the actions of administrative agencies is "severely limited." In re Musick, 143 N.J. 206, 216 (1996) (citation omitted). We do not substitute our judgment for that of an administrative agency. In re Crown/Vista Energy Project, 279 N.J. Super. 74, 79 (App. Div.), certif. denied, 140 N.J. 277 (1995). Rather, our inquiry is limited to determining whether the agency decision violated the enabling act's legislative policies or the state or federal constitution, whether substantial credible evidence in the record supports that decision, and whether the decision could not have been made upon a showing of the relevant factors. In re Taylor, 158 N.J. 644, 656 (1999) (citation omitted); In re Stream Encroachment Permit No. 12400, 231 N.J. Super. 443, 454 (App. Div.), certif. denied, 115 N.J. 70 (1989).

Moreover, in a "complex area where the Legislature has delegated a great amount of discretion to the administrative experts, deference must be accorded to the administrative agency's expertise and experience in its domain." Riverside Gen. Hosp. v. N.J. Hosp. Rate Setting Comm'n, 98 N.J. 458, 469 (1985) (citing In re 1976 Hosp. Reimbursement Rate for William B. Kessler Mem'l Hosp., 78 N.J. 564, 571 (1979)). So too, "an . . . agency has broad discretion in determining the sanctions to be imposed for a violation of the legislation it is charged with administering." In re Scioscia, 216 N.J. Super. 644, 660 (App. Div.), certif. denied, 107 N.J. 652 (1987) (citation omitted); see also Div. of State Police v. Jiras, 305 N.J. Super. 476, 482 (App. Div. 1997), certif. denied, 153 N.J. 52 (1998).

The DEP's implementation of the USHSA involves such a complex area where deference is appropriate. The preamble to the Act provides:

The Legislature finds and declares that millions of gallons of gasoline and other hazardous substances are stored prior to use or disposal, in underground storage tanks; that a significant percentage of these underground storage tanks are leaking due to corrosion or structural defect; that this leakage of hazardous substances from under ground storage tanks is among the most common causes of groundwater pollution in the State; and that it is thus necessary to provide for the registration and the systematic testing and monitoring of underground storage tanks to detect leaks and discharges as early as possible and thus minimize further degradation of potable water supplies. The Legislature further finds and declares that with the enactment by the United States Congress of the "Hazardous and Solid Waste Amendments of 1984," Pub.L. 98-616 (42 U.S.C. § 6991) it is necessary to authorize the Department of Environmental Protection to adopt a regulatory program that permits the delegation of the authority to carry out the federal act, but also recognizes the need of this State to protect its natural resources in the manner consistent with well-established environmental principles. [N.J.S.A. 58:10A-21.]

Discharge of hazardous substances is explicitly defined as an "intentional or unintentional release by any means of hazardous substances from an underground storage tank into the environment."

N.J.S.A. 58:10A-22(c). As part of the regulatory scheme promulgated to prevent discharges, overfill prevention devices, which are flapper valves designed to prevent USTs from overflowing during the filling process, are required. See N.J.S.A. 58:10A-25(a)(2); N.J.A.C. 7:14B-4.1(a)(3)(ii).

To strengthen enforcement of this environmental program, the DEP has been vested with authority to promulgate a penalty matrix for violations of the USHSA. See N.J.S.A. 58:10A-32 (providing that penalties pursuant to the Water Pollution Control Act, N.J.S.A. 58:10A-10, will apply to violations of USHSA); see also N.J.S.A. 58:10A-12 (providing that the Act should be construed liberally). The primary purpose in imposing these penalties is deterrence. See Lewis, supra, 215 N.J. Super. at 575.

Thus, N.J.S.A. 58:10A-10(d)(1)(a) authorizes the DEP Commissioner to assess, in accordance with a uniform policy adopted therefor, a civil administrative penalty of not more than $50,000.00 for each violation and each day during which such violation continues shall constitute an additional, separate, and distinct offense. Any amount assessed under this subsection shall fall within a range established by regulation by the commissioner for violations of similar type, seriousness, and duration. The commissioner shall adopt, by regulation, a uniform assessment of civil penalties policy by January 1, 1992.

N.J.A.C. 7:14-8.5 was duly adopted in 1989. The current version borrows language from its enabling statute, see N.J.A.C. 7:14-8.5(a), and provides that a "penalty shall be at the midpoint of the range within the matrix in (f) below, unless adjusted pursuant to (i) below." N.J.A.C. 7:14-8.5(e)(2) (emphasis added); see also N.J.A.C. 7:14-8.5(f); N.J.A.C. 7:14-8.5(i). N.J.A.C. 7:14-8.5(f) established penalty ranges according to "seriousness" and "conduct," each of which may be characterized as major, moderate, or minor. See N.J.A.C. 7:14-8.5(g); N.J.A.C. 7:14-8.5(h).

To be sure, the Grace Period Law allows grace periods for penalties "for minor violation [of environmental laws] that have minimal, if any, effect upon public health, safety or natural resources . . . ." N.J.S.A. 13:1D-125. A penalty may be imposed for a "minor" violation if the violation is not corrected during the grace period. N.J.S.A. 13:1D-128. Moreover, there are six criteria for determining whether violations are "minor," N.J.S.A. 13:1D-129(b)(1)-(6), and the failure to meet any one of these factors renders the exemption of the Grace Period Law inapplicable. Id.; N.J. Dep't of Envtl. Prot. v. Marisol, Inc., 367 N.J. Super. 614, 631 (App. Div. 2004). For present purposes, four such criteria are:

(1) The violation is not the result of the purposeful, knowing, reckless or criminally negligent conduct of the person responsible for the violation;

(2) The violation poses minimal risk to the public health, safety and natural resources;

(3) The violation does not materially and substantially undermine or impair the goals of the regulatory program;

(4) The activity or condition constituting the violation has existed for less than 12 months prior to the date of discovery by the department or local government agency[.]

[N.J.S.A. 13:1D-129(b)(1)-(4).]

Here, as the ALJ and Commissioner found, several of the criteria for deeming a violation of N.J.A.C. 7:14B-4.1(a)(3)(ii) minor have not been met. On this score, the record amply supports the agency determination that the violation has the potential to cause substantial environmental harm; that it was foreseeable; that there was evidence of prior spillage in the tank field and therefore no way of knowing whether the condition existed for less than twelve months; and finally, that appellant's failure to maintain operable overfill prevention devices does "materially and substantially undermine or impair the goals of the [UST] regulatory program" because the very purpose of the law and regulations governing USTs is to contain hazardous substances therein and prevent discharges of such substances into the environment. Thus, appellant did not satisfy all of the criteria necessary to render his violation "minor". As such, the Grace Period Law does not exempt appellant from penalty.*fn3

Appellant argues, alternatively, that the penalty is excessive because the "likelihood of a violation reoccurrence is remote" given his unawareness of the violation and his immediate remediation following DEP's discovery. We disagree.

Even in reducing the civil penalty, the ALJ acknowledged that the $15,000 assessment was at the midpoint for violations of moderate seriousness and conduct, and that "[m]ost of the regulatory criteria weighing mitigation and aggravation tend to favor [the DEP]." Indeed, a violation is moderate in seriousness if it "has caused or has the potential to cause substantial harm to human health or the environment," N.J.A.C. 7:14-8.5(g)(2)(i), or is one "which substantially deviates from the requirements of . . . [USHSA] . . .; substantial deviation shall include, but not be limited to, those violations which are in substantial contravention of the requirements or which substantially impair or undermine the operation or intent of the requirement." N.J.A.C. 7:14-8.5(g)(2)(iv). A violation that is moderate in conduct is "any unintentional but foreseeable act or omission by the violator." N.J.A.C. 7:14-8.5(h)(2).

Governed by these standards, we fully agree with the finding of both the ALJ and the Commissioner that appellant's violation is "moderate" in both seriousness and conduct. Even if the fuel truck driver was responsible for bypassing the overfill prevention device, as appellant suggests, appellant's failure to supervise the driver and monitor the condition of the USTs appears to fall squarely within the regulatory definitions of moderate seriousness and moderate conduct. Fuel spillage during a fill poses a serious risk of harm to the environment, thus thwarting the very purpose of USHSA which is to prevent discharge, and although purportedly unintentional, was foreseeable because bypassing the overfill prevention valve is a common practice. This being established, the midpoint of the penalty range for violations of moderate seriousness and conduct is $10,000-$20,000, see N.J.A.C. 7:14-8.5(f), and the penalty of $15,000 is at the midpoint as required by N.J.A.C. 7:14-8.5(e)(2). Accordingly, in assessing the quantum of penalty, the DEP clearly "adhere[d] to its duly promulgated rules and regulations." In re Crown/Vista Energy Project, supra, 279 N.J. Super. at 79; see also County of Monmouth v. Dep't of Corr., 236 N.J. Super. 523, 525 (App. Div. 1989).

We also reject appellant's further contention that the Commissioner ignored certain mitigating factors that serve to decrease the penalty from the midpoint of the range. In this regard, N.J.A.C. 7:14-8.5 provides, in relevant part,

(i) The Department may, in its discretion, move from the midpoint of the range to an amount no greater than the maximum amount nor less than the minimum amount in the range on the basis of the following factors:

1. The compliance history of the violator;

2. The number, frequency and severity of the violation(s);

3. The measures taken by the violator to mitigate the effects of the current violation or to prevent future violations;

4. The deterrent effect of the penalty;

5. The cooperation of the violator in correcting the violation, remedying any environmental damage caused by the violation and ensuring that the violation does not reoccur;

6. Any unusual or extraordinary costs or impacts directly or indirectly imposed on the public or the environment as a result of the violation;

7. Any impacts on the receiving water, including stress upon the aquatic biota, or impairment of receiving water uses, such as for recreational or drinking water supply, resulting from the violation; and

8. Other specific circumstances of the violator or violation.

The application of these factors to decrease or increase the penalty from the midpoint of the applicable range is highly discretionary. N.J.A.C. 7:14-8.5(i).

Save for the fact this was appellant's first documented violation, the remaining factors that are relevant here do not weigh in favor of mitigation. As the Commissioner found with factors 2, 3 and 5, N.J.A.C. 7:14-8.5(i)(2) examines the number, frequency and severity of the violation. Here, two of the three USTs had sticks placed in the overfill gauges, and the violations were continuous and ongoing. Further, although [appellant] did remove the broken sticks from the gauges, he was instructed by DEP to take further remedial action. There is evidence in the record that [appellant] did not fulfill all of the remedial requirements ordered by DEP, including the removal and testing of contaminated soil. On these facts, removal of the sticks alone is insufficient for N.J.A.C. 7:14-8.5(i)(3) or (5) to serve as a mitigating factor.

In light of these facts, we fail to see how the overarching goal of deterrence would be served in this case by a reduction in penalty below the midpoint. On the contrary, we find the Commissioner's reinstatement of the midpoint penalty of $15,000 well-grounded in the regulatory penalty matrix and the facts.


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